On March 24, the Hong Kong stock market experienced a broad recovery, with the healthcare sector leading the rebound. The innovative drug industry chain showed particularly strong performance. The Huabao HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880), which invests 100% in innovative drug R&D companies, and the HK Connect Healthcare ETF Huabao (159137), which has high exposure to CXO (Contract Research, Development, and Manufacturing Organization) companies, opened higher and continued to climb, surging over 4% on heavy trading volume, decisively ending a three-day losing streak.
Shares of innovative drug companies rose across the board. Weighted constituent Akeso of the HK Connect Innovative Drug ETF (520880) surged 7%, Innovent Biologics gained 5.23%, while Genuine Biotech -B and BioMap -B both rose over 10%. On the news front, Akeso's self-developed drug AK150 (a trispecific antibody product) received approval for clinical trials, further validating technological breakthroughs by domestic innovative drug companies in the ADC and multi-specific antibody fields.
Leading stocks from the WuXi system led gains in the healthcare sector. Weighted constituents WuXi XDC and WuXi AppTec of the HK Connect Healthcare ETF Huabao (159137) both soared over 10% following their earnings reports. The online healthcare concept also rebounded, with weighted constituent JD Health rising 3.87%.
Better-than-expected earnings from industry leaders injected a strong dose of confidence into Hong Kong's healthcare stocks. WuXi AppTec released its annual report the previous evening, showing revenue of 45.456 billion yuan for 2025. Net profit attributable to shareholders doubled year-over-year to 19.195 billion yuan, setting a new historical record. The company forecasts that its total revenue will exceed 50 billion yuan in 2026.
WuXi XDC, which also reported its annual results on the same day, delivered solid performance. Its revenue for 2025 reached 5.944 billion yuan, a 46.7% increase year-over-year, with overseas revenue contribution climbing to 85%. Net profit attributable to shareholders grew over 38%. Additionally, several other healthcare stocks, including BeiGene, Alibaba Health, Zai Lab, and JD Health, reported growth in both revenue and net profit.
Analysis from Zheshang Securities' healthcare team, based on financial, demand, and supply-side data, suggests that a fundamental inflection point has emerged for the CXO sector, with a sustained recovery expected. Against the backdrop of ongoing industry consolidation and relatively low stock prices, the team is optimistic about the bottom-fishing investment opportunities in leading domestic CDMO companies and CRO firms benefiting from the recovery in domestic demand.
From an investment timing perspective, Hong Kong healthcare stocks have been in a phase of adjustment since last September. The previous day, both the HK Connect Innovative Drug ETF (520880) and the HK Connect Healthcare ETF Huabao (159137) closed at their lowest historical closing prices. For investors looking to position for a potential rebound in Hong Kong healthcare stocks at low levels, these two instruments are highlighted.
For investing in the broader healthcare sector, the HK Connect Healthcare ETF Huabao (159137) is noted. It allocates approximately 70% of its portfolio to CXO and AI healthcare companies, while also covering innovative drugs and medical devices (including brain-computer interfaces). Its top ten holdings include leading online healthcare companies like JD Health and Alibaba Health.
For targeted exposure to innovative drug companies, the HK Connect Innovative Drug ETF (520880) invests 100% in innovative drug R&D firms. Its top ten holdings account for over 70% of the portfolio, emphasizing its focus on industry leaders.
A golden cross signal has formed on the MACD indicator, indicating positive momentum for these stocks.
Comments